CIMdata PLM Industry Summary Online Archive
29 May 2008
Financial News
Ansoft Corporation Revenue Increases Nearly 20%
Ansoft Corporation announced financial results for its fourth quarter of fiscal 2008 ended April 30, 2008.
Information Dissemination
PLEASE NOTE: In light of the press release issued on March 31, 2008, announcing the signing of a definitive agreement relating to the acquisition of Ansoft Corporation by ANSYS Inc., there will be no conference call to discuss the results of the fourth fiscal quarter of 2008.
Results for the Fourth Quarter and Fiscal Year 2008
Revenue for the fourth quarter totaled $33.9 million, an increase of 19%, compared to $28.6 million reported in the previous fiscal year's fourth quarter.
On a non-GAAP basis, net income for the fourth quarter was $10.7 million, or $0.43 per diluted share, compared to net income of $8.7 million, or $0.33 per diluted share in the previous fiscal year’s fourth quarter, representing a 30% increase in diluted earnings per share. Non-GAAP net income excludes merger-related expenses, net of taxes, stock-based compensation, net of taxes, and amortization of intangibles from acquisitions, net of taxes. See “Discussion of Non-GAAP Financial Measures” below for further information.
On a GAAP basis, net income for the fourth quarter was $8.5 million, or $0.34 per diluted share, compared to GAAP net income of $7.9 million, or $0.30 per diluted share in the previous fiscal year's fourth quarter. Current quarter results include $1.7 million, or $0.07 per diluted share in merger-related expenses.
“We experienced revenue growth in both domestic and international markets and in both product lines,” said Nicholas Csendes, Ansoft’s president and CEO. “We are pleased to have had such a strong finish to our fiscal year with nearly 20% growth in revenue during the fourth quarter.”
Csendes noted, “On March 31, 2008, we announced that Ansoft and ANSYS had signed a definitive agreement for ANSYS to acquire Ansoft. We believe there are strong synergies between the two companies and are very excited about the combination. In light of the proposed transaction, we will not be providing guidance for future periods.”
Revenue for the fiscal year totaled $103.4 million, an increase of 16% compared to $89.1 million reported in the previous fiscal year.
On a non-GAAP basis, net income for the fiscal year was $27.6 million, or $1.09 per diluted share, compared to net income of $23.1 million, or $0.88 per diluted share in the previous fiscal year, representing a 24% increase in diluted earnings per share. Results for the previous fiscal year include a tax benefit of $0.9 million, or $0.03 per diluted share, for the U.S. Research and Development Tax Credit enacted retroactive by Congress in December 2006 that relates to credits earned in fiscal year 2006.
On a GAAP basis, net income for the fiscal year was $24.1 million, or $0.95 per diluted share, compared to GAAP net income of $20.2 million, or $0.77 per diluted share in the previous fiscal year. Current year results include $1.7 million, or $0.07 per diluted share in merger-related expenses. Results for the previous fiscal year include a tax benefit of $0.9 million, or $0.03 per diluted share for the U.S. Research and Development Tax Credit enacted retroactive by Congress in December 2006 that relates to credits earned in fiscal year 2006.
Discussion of Non-GAAP Financial Measures
We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business and in making operating decisions. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the continuing operations of our business. By continuing operations, we mean the ongoing revenue and expenses of the business excluding certain items that render comparisons with prior periods or analysis of ongoing operating trends more difficult, such as expenses not directly related to the actual cash costs of development, sale, delivery or support of our products and services.
Consistent with this approach, we believe that providing the non-GAAP information to investors, in addition to the GAAP presentation, allows investors to view our financial results in the way management views the operating results. We further believe that providing this information allows investors to not only better understand our financial performance but, more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance.
While management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Further, investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, some of the adjustments to our GAAP financial measures reflect the inclusion or exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future.
In addition, other companies, including other companies in our industry, may calculate non-GAAP net income (loss) differently than we do, limiting its usefulness as a comparative tool. Management compensates for these limitations by providing specific information regarding the GAAP amounts included and excluded from the non-GAAP financial measures. In addition, management evaluates the non-GAAP financial measures together with the most directly comparable GAAP financial information.
A detailed explanation of each of the adjustments to the non-GAAP financial measures we use is described below. This press release also contains a reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure.
Amortization of intangibles from acquisitions and its related tax impact. We incur amortization expense related to various acquisitions we have made over the years. Management excludes these expenses and their related tax impact for the purpose of calculating non-GAAP net income and non-GAAP diluted earnings per share when it evaluates our continuing operational performance because these costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition. Accordingly, management does not consider these expenses for purposes of evaluating our performance during the applicable time period after the acquisition, and it excludes such expenses when making decisions to allocate resources. We believe that providing this non-GAAP financial measure is useful to investors because it allows investors to evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making.
Stock-based compensation expense and its related tax impact. We incur expense related to stock-based compensation included in our GAAP presentation of sales and marketing expense, research and development expense and general and administrative expense. Although stock-based compensation is an expense and viewed as a form of compensation, management excludes these expenses for the purpose of calculating non-GAAP net income and non-GAAP diluted earnings per share when it evaluates our continuing operational performance. Specifically, we exclude stock-based compensation during our annual budgeting process. The annual budgeting process is the primary mechanism whereby we allocate resources to various initiatives and operational requirements. Additionally, the annual review by the board of directors during which it compares our historical business model and profitability as it relates to the planned business model and profitability for the forthcoming year excludes the impact of stock-based compensation. We believe that providing this non-GAAP financial measure is useful to investors because it allows investors to evaluate our operating results and the effectiveness of the methodology used by management to review our operating results. Further, we believe that excluding stock-based compensation expense allows for a more accurate comparison of our financial results to previous periods during which our equity compensation programs were not required to be reflected in our statements of operations.
Merger-related expenses and its related tax impact. We incurred professional fees related to our pending merger with ANSYS, Inc during the fourth quarter of the current fiscal year. Management excluded these expenses and their related tax impact for the purpose of calculating non-GAAP net income and non-GAAP diluted earnings per share when it evaluated our continuing operational performance because these costs are specific to the pending merger and not our ongoing operations. We believe that providing this non-GAAP financial measure is useful to investors because it allows investors to evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making.
Pursuant to the requirements of Regulation G, we have provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures (see full press release for details)
Important Additional Information to be Filed with the SEC
In connection with the proposed acquisition of Ansoft by ANSYS, Inc., ANSYS filed with the SEC a registration statement on Form S-4 (Registration No. 333-150435), which includes a preliminary prospectus/proxy statement of ANSYS and Ansoft and other relevant materials in connection with the proposed transaction. This material is not a substitute for the prospectus/proxy statement regarding the proposed transaction. Investors and security holders of ANSYS and Ansoft are urged to read the preliminary prospectus/proxy statement and the other relevant material and the final prospectus/proxy statement when they become available because they contain important information about ANSYS, Ansoft and the proposed transaction. The prospectus/proxy statement and other relevant materials, and any and all documents filed by ANSYS or Ansoft with the SEC, may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by ANSYS by directing a written request to ANSYS, Inc., Southpointe, 275 Technology Drive, Canonsburg, Pennsylvania 15317, Attention: Investor Relations. Investors and security holders may obtain free copies of the documents filed with the SEC by Ansoft by directing a written request to Ansoft Corporation, 225 West Station Square Drive, Suite 200, Pittsburgh, PA 15219, Attention: Investor Relations. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROSPECTUS/PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION.
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
ANSYS, Ansoft and their respective executive officers, directors and trustees may be deemed to be participants in the solicitation of proxies from the security holders of Ansoft in connection with the proposed transaction. Information about the executive officers and directors of ANSYS and their ownership of ANSYS common stock is set forth in the proxy statement for ANSYS’ 2008 Annual Meeting of Stockholders, which was filed with the SEC on April 3, 2008. Information about the executive officers and directors of Ansoft and their ownership of Ansoft common stock is set forth in the proxy statement for Ansoft’s 2007 Annual Meeting of Stockholders, which was filed with the SEC on July 26, 2007. Investors and security holders may obtain additional information regarding the direct and indirect interests of ANSYS, Ansoft and their respective executive officers, directors and trustees in the proposed transaction by reading the prospectus/proxy statement referred to above.
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